16 Stocks Under $5 Trading At Discounts To Target Price

Looking for undervalued stocks? Value investors look for opportunities to buy stocks that are trading at significant discounts to their fair value, with the assumption that they’ll move up to their fair value in the near future. One proxy for fair value is analyst target price. [Related List: 5 Stocks Under $5 Undervalued by EPS Trends ]

We ran a screen on stocks trading below $5, and above $1, and with market caps above $100 million, for those trading at steep discounts to their analyst target prices, which may indicate that they are undervalued.

But because target prices are notoriously inflated, we only used the most pessimistic (the lowest) target prices, and for stocks with sufficient analyst coverage we only screened for stocks with 5 or more analyst ratings.

Sixteen companies made our list. Use the information below as a starting point for your own analysis.

Interactive chart: See changes in average analyst ratings for the first 8 stocks on this list over the past two years. Most of these stocks have average ratings of "Strong Buy"

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1. ShoreTel, Inc. ( SHOR): Provides Internet protocol (IP) telecommunications systems for enterprises in the United States. Market cap at $217.34M, most recent closing price at $3.70. Of the 7 analysts that have set a target price on the stock, the lowest price target stands at $5. This implies a potential upside of 32.97% from current levels around $3.76.

2. Vical Inc. ( VICL): Engages in the research and development of biopharmaceutical products based on its DNA delivery technologies for the prevention and treatment of serious or life-threatening diseases. Market cap at $348.45M, most recent closing price at $4.04. Of the 5 analysts that have set a target price on the stock, the lowest price target stands at $5. This implies a potential upside of 30.54% from current levels around $3.83.

3. Noranda Aluminum Holding Corp. ( NOR): Engages in the production and sale of primary aluminum products and rolled aluminum coils in the United States. Market cap at $309.57M, most recent closing price at $4.57. Of the 6 analysts that have set a target price on the stock, the lowest price target stands at $6. This implies a potential upside of 30.43% from current levels around $4.6.

4. Curis Inc. ( CRIS): Focuses on the research and development of cancer therapeutics. Market cap at $269.2M, most recent closing price at $3.36. Of the 6 analysts that have set a target price on the stock, the lowest price target stands at $4.5. This implies a potential upside of 30.057% from current levels around $3.46.

5. Callidus Software Inc. ( CALD): Provides sales performance management (SPM) software and services. Market cap at $172.42M, most recent closing price at $4.63. Of the 5 analysts that have set a target price on the stock, the lowest price target stands at $6. This implies a potential upside of 29.58% from current levels around $4.63.